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Technology Stocks : Broadcom (BRCM)

BRCM 54.67

0.0%

Feb 9 4:00 PM EST

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To: Raymond Duray who wrote (4144)	8/17/2000 1:40:17 AM
From: RetiredNow	Read Replies (2) of 6531

Hey Raymond, pooling is better than purchasing for acquisitive tech companies, because they can write-off many of the R&D and acquisition costs in one big bang. By write-off, I mean report the cost as an extraordinary item. Analysts ignore extraordinary items, because they are interested in comparing apples to apples earnings. If those same companies accounted using the purchase method, then they'd have to book all those items as an asset and amortize it. That means a huge drag on earnings for many years to come. Tech companies HATE drags on earnings, because they are awarded high PE due primarily to the high earnings and revenue growth rates they promise. So with pooling, acquisitive tech companies like Cisco have been having their cake and eating it too. To be honest with you I think pooling makes alot of sense in the tech industry where technologies go obsolete in a couple years, but most accountants think purchase method is more closer to the truth - whatever the hell truth is. :) Hope that helps.

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